Equitable Leasing Corp. v. Myers

265 S.E.2d 240 (1980)

EQUITABLE LEASING CORPORATION
v.
Harold Earl MYERS, d/b/a Myers Trading Post, and Juanita M. Myers.

No. 7920SC583.

Court of Appeals of North Carolina.

April 15, 1980.

Kluttz & Hamlin by Malcolm B. Blankenship, Jr., Salisbury, for plaintiff.

Bailey, Brackett & Brackett, P.A. by William L. Sitton, Jr., Charlotte, for the defendants.

WELLS, Judge.

We deal first with defendant Juanita Myers' argument that the trial court's denial of plaintiff's motion for summary judgment against her is not appealable. The denial of summary judgment is interlocutory in nature and not appealable under G.S. 1-277 and G.S. 7A-27, unless a substantial right of one of the parties would be affected if the appeal were not heard prior to final judgment. Motyka v. Nappier, 9 N.C.App. 579, 176 S.E.2d 858 (1970). The record does not reveal that any such substantial right is involved in the present case. Accordingly, we hold that plaintiff's appeal as to defendant Juanita Myers should be dismissed.

We next deal with the question of whether the summary judgment entered against defendant Harold Myers is appealable, since it is clear that the judgment appealed from adjudicates the rights and liabilities of fewer than all the parties. Although plaintiff does not raise the issue in its brief, it is the duty of an appellate court to dismiss an appeal on its own motion if there is no right to appeal. Waters v. Personnel, Inc., 294 N.C. 200, 240 S.E.2d 338 (1978). The question here involves interpretation of G.S. 1A-1, Rule 54(b), which provides in pertinent part:

(b) Judgment upon multiple claims or involving multiple parties.—When . . multiple parties are involved, the court may enter a final judgment as to one or more but fewer than all of the . . . parties only if there is no just reason for delay and it is so determined in the judgment. Such judgment shall then be subject to review by appeal or otherwise provided by these rules or other statutes. In the absence of entry of such a final judgment, any order or form of decision, however designated, which adjudicates. . . the rights and liabilities of fewer than all the parties shall not terminate the action as to any of the . . . parties and shall not then be subject to review either by appeal or otherwise except as expressly provided by these rules or other statutes. Similarly, in the absence of entry of such a final judgment, any order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the. . . rights and liabilities of all the parties. [Emphases added.]

The North Carolina Rule 54(b) is substantially similar to its Federal counterpart, as that Rule was amended in 1961, and we have therefore appropriately considered Federal decisions and authorities for guidance and direction in the interpretation of our Rule. In Arnold v. Howard, 24 N.C. App. 255, 210 S.E.2d 492 (1974) Judge Parker, speaking for the Court, stated that the need for Rule 54(b) arose from the increased opportunity for liberal joinder of claims and parties under the Rules of Civil Procedure. The Court commented that the Rule contemplated that the trial court would act as the "dispatcher" of cases to the appellate courts and would determine, in the first instance, the time at which each "final decision" disposing of less than all the claims in a multiple claim suit or the liability of less than all of the parties in a multiparty suit, is appropriate for appeal. Judge Parker explained that under the Rule, the trial court is granted the discretionary authority to enter a final judgment as to fewer than all of the parties, "only if there is no just reason for delay and it is so determined in the judgment," and that by expressing this determination in the judgment the trial judge is in effect "certifying" that the judgment is a final judgment and subject to immediate appeal. However, the Court held that under Rule 54(b), in the absence of certification by the trial court, any order or other form of decision, however designated, which adjudicates fewer than all of the claims, or the rights and liabilities of fewer than all of the parties, would be considered interlocutory and not appealable. Our opinion in Arnold was not reviewed by the Supreme Court. Arnold is in line with the interpretation given Federal Rule 54(b):

Unlike original Rule 54(b), which did not lodge any control in the trial court over any adjudication that it rendered, the amended Rule defines finality in terms of what the [trial] court does and gives this court broad discretion in applying finality. Flexibility is introduced by giving the [trial] court, which has first hand information as to the litigation and its progress, power to determine that when one branch of it has been adjudicated it is or is not then ripe for appellate review.

6 Moore's Federal Practice ¶ 54.28[1], pp. 363-364 (1976).

The question was next before this Court in Newton v. Insurance Co., 27 N.C.App. 168, 218 S.E.2d 231 (1975), rev'd, 291 N.C. 105, 229 S.E.2d 297 (1976). We held that since the defendant had sought recovery under two claims, one for actual damages and the other for punitive damages, an appeal from an order of the trial court dismissing the claim for punitive damages was interlocutory and not final because it had adjudicated fewer than all the claims and the trial court had certified the judgment for immediate appeal under Rule 54(b). Our Supreme Court reversed, Justice Exum reasoning that the North Carolina Rule 54(b) must be distinguished from its Federal counterpart because our Rule states an exception permitting appeal where allowed by statute, such as the exceptions stated in G.S. 1-277 and G.S. 7A-27(d) which authorize appeal from certain interlocutory orders and judgments. Justice Exum concluded that our Rule 54(b) expands, rather than restricts, the compass of review of orders and judgments, and held that a substantial right of the plaintiff would be affected if plaintiff's claim for punitive damages was not heard before the same judge and jury as heard the claim for compensatory damages. Appeal was thus allowed under G.S. 1-277 and G.S. 7A-27(d). See also Oestreicher v. Stores, 290 N.C. 118, 225 S.E.2d 797 (1976); Highway Commission v. Nuckles, 271 N.C. 1, 155 S.E.2d 772 (1967).

The issue was again before the appellate courts of our State in the case of Investments v. Housing, Inc., 28 N.C.App. 385, 221 S.E.2d 381 (1976), rev'd, 292 N.C. 93, 232 S.E.2d 667 (1977). In that case the trial court had granted summary judgment in favor of the plaintiff for the monetary sum of $204,603.55, but retained for trial the issue of defendants' right to a set-off. Execution was entered to enforce the judgment and an order entered by the Clerk of the Superior Court declaring the judgment a lien upon funds alleged to be owing to the defendant from a third party. We held that this judgment adjudicated fewer than all the claims or the rights and liabilities of fewer than all the parties, and dismissed the appeal as premature under Rule 54(b). Our Supreme Court reversed, stating that the statutory provisions available to defendant for a stay of execution upon a money judgment under G.S. 1-269 and G.S. 1-289, as well as the authorization which Rule 62(g) grants the trial court to stay enforcement of a judgment pending its determination of other aspects of the litigation, would require defendant, even if successful, to incur a substantial expense. The Court concluded, "Thus, the existence of those procedures for staying execution on the judgment does not prevent the entry of the judgment from affecting a substantial right of the judgment debtor." 292 N.C. at 99, 232 S.E.2d at 672. The Court held that the trial court's judgment was appealable under the "substantial right" exception provided in Rule 54(b) through G.S. 1-277 and G.S. 7A-27(d). We will further discuss Investments later in this opinion.

The question was next before our Supreme Court in Nasco Equipment Co. v. Mason, 291 N.C. 145, 229 S.E.2d 278 (1976). In Nasco, the question before the Court involved competing creditors of Mason Lumber Company, both of whom asserted an interest in a chattel which had been delivered to Mason by the plaintiff, a supplier. A third-party defendant, First Citizens Bank and Trust Company asserted a claim for the chattel based on a security agreement executed in favor of the bank. The trial court granted summary judgment for the bank. We had dismissed plaintiff's appeal in an unpublished opinion on grounds that the judgment appealed from adjudicated "fewer than all the claims or the rights and liabilities of fewer than all the parties" and did not state that there is "no just reason for delay," as required by Rule 54(b). Our Supreme Court reversed, holding that the order granting summary judgment denied the plaintiff a jury trial on the issue of its claim against the bank and, in effect, determined the action in favor of the bank. While there is language in the Nasco opinion indicating that the appeal was allowed under the "substantial right" exception, the Court later stated that the holding in Nasco instead rests on the fact that the summary judgment in that case "was, in effect, a final judgment ultimately disposing of all claims of any practical significance in the case." Industries, Inc. v. Insurance Co., infra, 296 N.C. at 493, 251 S.E.2d at 448. See also, Whalehead Properties v. Coastline Corp., 299 N.C. 270, 261 S.E.2d 899 (1980).

The question was next before our Supreme Court in Waters v. Personnel, Inc., 294 N.C. 200, 240 S.E.2d 338 (1978), in which the Court held that we had erred in entertaining and not dismissing the appeal from an order of the trial court setting aside a previous trial court judgment granting summary judgment for the defendant. Waters involved only two parties and only one claim. Justice Exum, writing for the Court, held that the order from which the purported appeal was taken was interlocutory, in that it contemplated further proceedings on the summary judgment question at the trial level. The appellate court's failure to review the trial court's action prior to entry of a final judgment was held not to deprive the defendant of any substantial right. Justice Exum explained that our courts have consistently held that denial of a motion for summary judgment is not appealable, and that the trial court's order setting aside summary judgment for defendant was analogous to the denial of summary judgment.

The question was again before our Supreme Court in Industries, Inc. v. Insurance Co., 296 N.C. 486, 251 S.E.2d 443 (1979), in which the Court upheld an order of this Court dismissing, without opinion, defendant's appeal. The appeal was from an order of the trial court allowing plaintiff's motion for partial summary judgment on the issue of liability, reserving for trial the issue of damages, and denying defendant's motion for summary judgment. From the decisions of our Supreme Court in Waters and Industries it is evident that an interlocutory judgment or order which does not affect a substantial right of one of the parties or is not otherwise appealable under G.S. 1-277 or G.S. 7A-27 may not be appealed. From these cases it is also apparent that the Court in its most recent decisions is taking a restricted view of the "substantial right" exception, holding that the avoidance of a rehearing or trial is not a "substantial right" entitling a party to an immediate appeal. We believe that the philosophy espoused in those later cases indirectly conflicts with the Court's earlier holding in Investments v. Housing, Inc., supra, which we discussed previously. On its face, Investments holds that a monetary judgment against the defendants which does not dispose of all the claims of all of the parties nonetheless affects a substantial right of the defendants sufficient to permit immediate appeal.

The model set out on the following page states the correct procedure for determining whether a given case is appealable under our statutes, rules and case law. Where the right to appeal is conferred by statute, i. e., where a substantial right of the parties would be affected if immediate appeal were not permitted under G.S. 1-277 or G.S. 7A-27, the judgment is appealable whether it is final or interlocutory in nature. Where there is no such statutory right to appeal, the next question is whether the judgment is in effect final as to all of the claims and parties. If so, the judgment is immediately appealable. If not, the next question must be whether the specific action of the trial court from which appeal is taken is final or interlocutory. If the court's action is interlocutory, no appeal will lie whether or not certified for appeal by the trial court. If the action is final as to fewer than all claims or the rights and liabilities of fewer than all parties, but has not been certified for appeal by the trial court under Rule 54(b), no appeal will lie. On the other hand, an appeal from such a final judgment or order will be allowed if it is properly certified under the Rule.

From the model it is clear that the vitality of the Rule 54(b) procedure which establishes the trial court as "dispatcher" of cases to the appellate division is largely dependent on how narrowly the statutory exceptions to the Rule are construed. To the extent that judgments are determined by the appellate courts of our State to affect a "substantial right" of one of the litigants under G.S. 1-277 and G.S. 7A-27(d), the procedure for trial court certification established in Rule 54(b) is bypassed and the appellate court is substituted as the true dispatcher of appeals. In this regard the previously discussed Investments case creates the apparent anomaly of including all partial summary judgments entered for a monetary sum in the substantial right exception. We note that G.S. 1A-1, Rule 62(g) allows the trial court, after it has ordered a final judgment under the conditions stated in Rule 54(b), to stay enforcement of such a judgment until the entering of a subsequent judgment or judgments and to prescribe such conditions as are necessary to prevent harm that might result to a party if the trial court should decide not to certify a judgment for immediate appeal.

We are aware that there is dictum in Oestreicher v. Stores, 290 N.C. 118, 225 S.E.2d 797 (1976) to the effect that a trial court's appeal entry constitutes sufficient compliance with the certification requirement of Rule 54(b). However, as clarified by the Supreme Court's later opinion in Industries, Inc. v. Insurance Co., 296 N.C. 486, 251 S.E.2d 443 (1979), the Oestreicher holding rests solely on the substantial right exception, and accordingly the case does not stand for the proposition that there was proper certification under the Rule. Typically, an appeal entry only shows counsel's compliance with various Rules of Appellate Procedure, e. g., that the appeal was duly taken, that the undertaking on appeal required by Appellate Rule 6 was approved by the trial court, or that an extension of time for serving the proposed record on appeal was granted by the court. The act of signing such an appeal entry reflects the trial court's position that the technical requirements for perfecting an appeal have been met. It is not an unequivocal act showing that the trial court has determined that the judgment appealed from is final and that there is no just reason for delay, as required by Rule 54(b). Additionally, Rule 54(b) expressly provides that this determination must be made in the judgment. We are accordingly convinced that the signing of an appeal entry by the trial court cannot, in and of itself, be held to satisfy the affirmative act of certification required by Rule 54(b).

In the case sub judice, however, we believe we are bound by Investments to hold that the trial court's entry of summary judgment for a monetary sum against defendant Harold Myers affects a "substantial right" of this defendant. Accordingly, we must treat the judgment as immediately appealable under G.S. 1-277 and G.S. 7A-27.

We hold that summary judgment was improvidently granted against defendant Harold Myers on the issue of damages. Defendants allege in their amended answer that plaintiff failed to use diligence to mitigate its damages before and after repossession of the equipment. Since plaintiff's affidavits do not conclusively show that such due diligence was in fact exercised, a material issue of fact remains concerning the sufficiency of plaintiff's attempt to mitigate damages. Cf., Cotton Mills v. Goldberg, 202 N.C. 506, 163 S.E. 455 (1932) (seller of goods has duty to exercise reasonable diligence to diminish and minimize loss from buyer's breach of contract by undertaking to dispose of the waste for the best price obtainable under all the circumstances); cf., G.S. 25-2-706 (upon buyer's breach, seller who chooses to resell the goods must do so in good faith and in a commercially reasonable manner to be eligible to recover certain damages).

That portion of the summary judgment granted against defendant Harold Myers which awards plaintiff attorney's fees must also be reversed. A lease does not constitute evidence of indebtedness within the meaning of G.S. 6-21.2, and attorney's fees may not be allowed, even though they were expressly provided for in the contract. Systems, Inc. v. Yacht Harbor, Inc., 40 N.C.App. 726, 253 S.E.2d 613 (1979).

As to plaintiff's appeal, dismissed.

As to the summary judgment entered against defendant Harold Myers, reversed.

ROBERT M. MARTIN and ERWIN, JJ. concur.